Technovation 28 (2008) 473–484 Intellectual Property management in publicly funded R&D centres—A comparison of university-based and company-based research centres Beth Young a , Nola Hewitt-Dundas b , Stephen Roper c, a PricewaterhouseCoopers LLP, Waterfront Plaza, Laganbank Road, Belfast, UK b School of Management, Queen’s University Belfast, BT7 1NN Belfast, UK c Centre for Small and Medium Enterprises, Warwick Business School, University of Warwick, Coventry CV4 7AL, UK Abstract Recent thinking on open innovation and the knowledge-based economy have stressed the importance of external knowledge sources in stimulating innovation. Policy-makers have recognised this, establishing publicly funded Centres of R&D Excellence with the objective of stimulating industry–science links and localised innovation spillovers. Here, we examine the contrasting IP management practices of a group of 18 university- and company-based R&D centres supported by the same regional programme. Our analysis covers all but one of the Centres supported by the programme and suggests marked contrasts between the IP strategies of the university-based and company- based centres. This suggests the potential for very different types of knowledge spillovers from publicly funded R&D centres based in different types of organisations, and a range of alternative policy approaches to the future funding of R&D centres depending on policy- makers’ objectives. r 2008 Elsevier Ltd. All rights reserved. Keywords: Public R&D; Intellectual Property; Ireland; Spillovers 1. Introduction Recent thinking on open innovation (Chesbrough, 2003), buiness eco-systems (Iansiti and Levien, 2004), and the knowledge-based economy (Cooke and Leydesdorff, 2006) stresses the importance of external knowledge sources in stimulating innovation. Policy-makers have recognised the importance of external knowledge by establishing publicly funded R&D centres (PRCs) with the objective of stimulating industry–science links and localised innovation spillovers (e.g. Feller, 2004; Debackere and Veugelers, 2005; Graversen et al., 2005). The effect which such publicly funded research centres can have on innovation and economic growth is the subject of a number of studies (Link and Scott, 2005; Debackere and Veugelers, 2005; Roper, 2000; Siegel et al., 2003; Chen et al., 2004), with others (e.g. Bigliardi et al., 2006) examining the related issue of the role of Science Parks in technology transfer and economic development. Beugelsdijck and Cornet (2001) suggest a useful distinc- tion between two types of knowledge spillover which may arise from such publicly funded research: rent-based spillovers mediated through market mechanisms, and pure knowledge spillovers which result from un-priced knowl- edge exchange. Shaping both types of knowledge transfer is the management (i.e. identification, development and exploitation) of Intellectual Property by the PRCs and other organisations (Dietz and Bozeman, 2005). For firms, effective IP management may enable value to be created and sustained (Coriat and Orsi, 2002; Hanel, 2006). For universities, effective IP management can generate revenue through licenses and spin-out companies (Roper et al., 2004; Siegel et al., 2003; Lee and Win, 2004; Gloet and Terziovski, 2004). Our objective here is to explore differences between the IP management practices of publicly funded research centres (PRCs) based in universities and firms, and consider how these may influence subsequent knowledge spillovers. Our study is based on a real-time monitoring ARTICLE IN PRESS www.elsevier.com/locate/technovation 0166-4972/$ - see front matter r 2008 Elsevier Ltd. All rights reserved. doi:10.1016/j.technovation.2008.02.004 Corresponding author. E-mail addresses: [email protected] (B. Young), [email protected] (N. Hewitt-Dundas), [email protected](S. Roper).
Transcript
ARTICLE IN PRESS
0166-4972/$ - se
doi:10.1016/j.te
�CorrespondE-mail addr
nm.hewitt@qub
(S. Roper).
Technovation 28 (2008) 473–484
www.elsevier.com/locate/technovation
Intellectual Property management in publicly funded R&D centres—Acomparison of university-based and company-based research centres
Beth Younga, Nola Hewitt-Dundasb, Stephen Roperc,�
aPricewaterhouseCoopers LLP, Waterfront Plaza, Laganbank Road, Belfast, UKbSchool of Management, Queen’s University Belfast, BT7 1NN Belfast, UK
cCentre for Small and Medium Enterprises, Warwick Business School, University of Warwick, Coventry CV4 7AL, UK
Abstract
Recent thinking on open innovation and the knowledge-based economy have stressed the importance of external knowledge sources in
stimulating innovation. Policy-makers have recognised this, establishing publicly funded Centres of R&D Excellence with the objective
of stimulating industry–science links and localised innovation spillovers. Here, we examine the contrasting IP management practices of a
group of 18 university- and company-based R&D centres supported by the same regional programme. Our analysis covers all but one of
the Centres supported by the programme and suggests marked contrasts between the IP strategies of the university-based and company-
based centres. This suggests the potential for very different types of knowledge spillovers from publicly funded R&D centres based in
different types of organisations, and a range of alternative policy approaches to the future funding of R&D centres depending on policy-
makers’ objectives.
r 2008 Elsevier Ltd. All rights reserved.
Keywords: Public R&D; Intellectual Property; Ireland; Spillovers
1. Introduction
Recent thinking on open innovation (Chesbrough,2003), buiness eco-systems (Iansiti and Levien, 2004), andthe knowledge-based economy (Cooke and Leydesdorff,2006) stresses the importance of external knowledgesources in stimulating innovation. Policy-makers haverecognised the importance of external knowledge byestablishing publicly funded R&D centres (PRCs) withthe objective of stimulating industry–science links andlocalised innovation spillovers (e.g. Feller, 2004; Debackereand Veugelers, 2005; Graversen et al., 2005). The effectwhich such publicly funded research centres can have oninnovation and economic growth is the subject of a numberof studies (Link and Scott, 2005; Debackere and Veugelers,2005; Roper, 2000; Siegel et al., 2003; Chen et al., 2004),with others (e.g. Bigliardi et al., 2006) examining the
e front matter r 2008 Elsevier Ltd. All rights reserved.
related issue of the role of Science Parks in technologytransfer and economic development.Beugelsdijck and Cornet (2001) suggest a useful distinc-
tion between two types of knowledge spillover which mayarise from such publicly funded research: rent-basedspillovers mediated through market mechanisms, and pureknowledge spillovers which result from un-priced knowl-edge exchange. Shaping both types of knowledge transfer isthe management (i.e. identification, development andexploitation) of Intellectual Property by the PRCs andother organisations (Dietz and Bozeman, 2005). For firms,effective IP management may enable value to be createdand sustained (Coriat and Orsi, 2002; Hanel, 2006). Foruniversities, effective IP management can generate revenuethrough licenses and spin-out companies (Roper et al.,2004; Siegel et al., 2003; Lee and Win, 2004; Gloet andTerziovski, 2004).Our objective here is to explore differences between the
IP management practices of publicly funded researchcentres (PRCs) based in universities and firms, andconsider how these may influence subsequent knowledgespillovers. Our study is based on a real-time monitoring
ARTICLE IN PRESSB. Young et al. / Technovation 28 (2008) 473–484474
exercise of the IP management practices in a group of UKPRCs established since 2002. This localised, and detailedapproach, complements the more abstract but broadlybased analysis of Guellec and Van Pottelsberghe De LaPotterie (2004), for example, providing insights into theprocesses underlying local knowledge transfers. Our paperaddresses the need highlighted by Link and Siegel (2005)for more specific micro-evidence on the operation oftechnology transfer initiatives in different national andregional contexts.
The remainder of the paper is organised as follows.Section 2 outlines our conceptual approach and empiricalpropositions. Section 3 reviews the policy context for ourempirical study and describes our data sources andmethods. Section 4 explores the IP management practicesof the PRCs, and Section 5 indicates the influence whichorganisational context has on the IP strategies adopted byPRCs. Section 6 draws out the implications for regionalknowledge spillovers and future policy decisions.
2. Literature and propositions
Our main interests here are the contrasting IP manage-ment practices adopted by PRCs in the very differentorganisational settings represented by universities andfirms. Inevitably, these IP regimes will reflect—at least inpart—the strategic objectives of the organisations in whichthe PRC is based (Bozeman, 2000; Bigliardi et al., 2006),any ambiguities in these organisational objectives (e.g.Jarzabkowski, 2005), and the situation of the specificbusiness unit or department in which the PRC operates. Interms of university-based PRCs, for example, the historicalnorm has been the ‘open science’ model, where newknowledge is viewed as a public good, and universitiesplaced little priority on IP ownership. EU (2004) arguesthat this open science model is most effective in stimulatingcommercialisation where ‘‘the technology has far reachingimplications and where the risks of mis-appropriationby private interests are detrimental to the public interest’’(p. 11). The incentive structure in the open science model,suggests that PRCs are likely to adopt an essentiallypassive approach to IP development and exploitation,instead investing any available resources in additionalresearch activity. Commercialisation then depends on theabsorptive capacity of firms, i.e. their ability to identify,absorb and appropriate new technologies developed byPRCs (e.g. Zahra and George, 2002). This may be aparticularly pressing issue in less developed regions wherethe absorptive capacity of local firms is less well developedthan that elsewhere (e.g. Rodriguez-Pose, 1999; Fernandezet al., 1996).
More recently, however, and most notably in the USsince the Bayh-Dole Act, universities and public researchorganisations have placed increasing emphasis on theirprivate ownership of IP, and consequently have had theincentive to adopt a more proactive role in IP developmentand exploitation. Marques et al. (2006, p. 535) refer to this
as the emergence of a ‘dual cognitive approach to academicscience’, where academics seek to expand understandingand knowledge as well as seek opportunities to protect andcommercialise their research results. This gives rise to the‘licensing model’ (EU, 2004). Here, PRCs engage in basicresearch, but are proactive, and devote resources to, theidentification, development and subsequent exploitation ofIP—generally through patents and licensing (Siegel et al.,2003; Lockett and Wright, 2005). EU (2004) argue that thisapproach can generate substantial benefits: ‘‘It is estimatedthat at least half the new products based on universitypatents would not have been developed if the results hadbeen put in the public domain without patent protection’’(p. 11). The same report, however, questions whether theadoption of the licensing model has been as successful inEurope as in the US, viz. ‘‘mere application of the licensingmodel has not been able to generate the same level offinancial or economic results [in Europe] as in the US’’(EU, 2004, p. 11).Mowery et al. (2004) argue that the increased focus on the
commercialisation of university research has, however, atleast in the US gone beyond the licensing model, influencingthe nature of university research itself, this has ‘‘changed theresearch culture of US universities, leading to increasedsecrecy, less sharing of research results, and a shift in thefocus of academic research away from fundamental towardsmore applied topics’’ (p. 1). In this ‘innovation model’,PRCs both adopt a proactive approach to IP developmentand exploitation and re-orient the type of R&D theyare undertaking to bridge the gap between fundamentaluniversity research and its commercialisation. EU (2004)argue that the social benefits resulting from the adoption ofthis innovation model may be larger, and more regionallyfocused, than those from the licensing model: ‘‘certain PROshave pioneered the implementation of the Innovation Modelwith conclusive evidence of success in terms of increased newcompany generation, enhanced relations with industry andlicensing activity’’ (p. 11).In addition to the university-based PRCs we are also
interested here in company-based PRCs, with a potentiallyimportant distinction being that between PRCs located inlocally owned firms and those located in the local plants ofmultinationals. Research conducted by locally ownedfirms, for example, will tend to focus on building internaltechnological capabilities with results evident in terms ofimprovements in ‘‘locally anchored technological capabil-ity and internationalization’’ (Kumar and Aggarwal, 2005,p. 456). By contrast, the increasing globalisation of R&Dmay mean that PRCs based in multinational companies arepart of an international R&D endeavour with implicationsfor the type and focus of R&D which is conducted andpotentially the spatial distribution of knowledge spillovers(e.g. Reddy, 1997). PRCs in locally owned firms are alsomore likely to need to devote internal resources to thedevelopment and exploitation of IP than PRCs in multi-nationals where IP development and protection may be aspecialist function.
ARTICLE IN PRESSB. Young et al. / Technovation 28 (2008) 473–484 475
Differences in organisational context, and contrastsbetween the types of R&D being conducted in the differenttypes of PRC, suggest our first proposition:
P1. IP management practices will differ between university-and company-based PRCs.
We also anticipate:
P1a. IP management practices will differ between PRCs
based in locally owned and multinational firms; and that
P1b. IP management practices will differ between univer-
sity-based PRCs depending on which IP model they adopt.
Implementing these strategies, however, focuses atten-tion on the actual process of IP creation, development andprotection (Hanel, 2006). The initial stage in this process isthe creation of IP, hence our second proposition:
P2. PRCs will implement incentives for the creation and
identification of IP which reflect the nature of the host
organisation and the IP model being adopted.
As suggested earlier, however, different types of PRCs indifferent settings are likely to devote differing levels ofresources to IP protection and development. PRCs insmaller firms, for example, may find it difficult to invest thelevel of resources necessary to protect their IP effectivelyand may adopt alternative commercial strategies tomaintain their technological leadership (e.g. Blackburn,2003; Bigliardi et al., 2006). This suggests P3 and P4:
P3. Use of formal IP protection methods will depend on the
organisational background of the PRC and is:
P3a. less likely among PRCs in locally owned firms than
those in multinationals; and,
P3b. more likely among university-based PRCs adopting the
innovation and licensing models than those adopting the open
science model.
P4. PRCs will use specialist services to support their IP
protection and exploitation strategies. Use of these services
will reflect the nature of the host organisation and the IP
model being adopted.
3. Data and methods
The PRCs considered here were established in 2002 aspart of the Centres of Excellence programme with supportfrom Northern Ireland (NI) government. The main aim ofthe programme was to increase the volume of R&D in theregion and so contribute to regional competitiveness. Eightuniversity- and 10 company-based centres were establishedas a result of an open call for proposals during 2001.Table 1 gives a brief overview of each centre. Managed byInvest NI—the regional development agency for NI—theprogramme received public funding of £34m (29.3%)matched by additional private sector funding of £82m over3 years. As a result of the competitive nature of this
programme, the subject focus of the PRCs is diversealthough there is an under-representation of privateservices which accounted for 10.3% of total grant-aid tothe company-based centres but 24.3% of business R&Din NI in 2002 (Department of Enterprise, Trade andInvestment, 2003, p. 10). In terms of manufacturing,pharmaceuticals was over-represented in the PRCs, ac-counting for around 12.3% of R&D by manufacturing inthe region in 2002 but around a third of programmeexpenditure and grant-aid. Programme expenditure wasalso notably more capital intensive than R&D spending ingeneral in NI, 29.6% compared to 7.6% (Department ofEnterprise, Trade and Investment, 2003). This is perhapsnot surprising given the infrastructural nature of theprogramme.Data used in this paper comprises three main elements.
First, each PRC was asked to complete a detailed email orpostal questionnaire every 4 months between February2004 and September 2006. This provided regular quanti-tative data on the level and type of R&D activityconducted by each PRC, its links to external partnersand its commercialisation activities. An overall responserate of 75% was achieved. Second, in-depth face-to-face interviews were conducted with each PRC on anirregular basis to validate data being returned in theirquestionnaires and follow-up issues of particular interest.Finally, in mid-2006 we carried out a series of semi-structured interviews that focussed specifically on IPdevelopment and management. Sixteen of the eighteenPRCs in the programme (88%) participated in this roundof interviews.Drawing on these interviews, the profile of the host
organisation, the types of R&D undertaken by the PRCsand their patterns of dissemination we were able to classifythe PRCs in terms of the models identified in Section 2.Classification of the company-based PRCs was relativelystraightforward as the main differentiation was in terms ofcompany ownership, i.e. whether the PRC was based in 4alocally owned firm or a multinational firm. Five company-based PRCs (PRC-9, PRC-10, PRC-11, PRC-12 and PRC-13) were part of larger multinational operations, while five(PRC-14, PRC-15, PRC-16, PRC-17 and PRC-18) werebased in locally owned firms (Table 1). Classification of theuniversity-based PRCs was more complex. The keydistinctions between the models of university-based PRCare the types of R&D they are undertaking and theirapproach to dissemination. As Table 1 shows, all of theuniversity-based PRCs were undertaking applied R&D aseither a major or minor focus. Similarly, each PRC (withthe exception of PRC-6) was carrying out some develop-mental research. Only four of the eight university-basedPRCs were involved in basic R&D. The profile of R&Dundertaken on its own was therefore a relatively poorpredictor of the IP model being adopted by each PRC.Considering the dissemination profile of the PRCs pro-vided more discriminatory power, however. Specifically,we classified the average number of publications and
ARTICLE IN PRESS
Table 1
Profile of PRCs
PRC Budget
(£m)
Employment
in 2005
Subject focus Host organisation Types of R&D undertaken
(K) Major focus (J) Minor element
Basic
R&D
Applied
R&D
Experimental
development
University-based PRCs
PRC-1 37.76 110 Electronic
communication
technologies
University K K J
PRC-2 4.20 4 Medical polymers University J K J
PRC-3 3.65 10 Aeronautical
technologies
University J K J
PRC-4 11.65 17 Nanotechnology University J K J
PRC-5 1.51 2 Software process
improvement
University K K
PRC-6 4.00 7 Functional genomics University K
PRC-7 0.95 6 Technology start-up &
incubation
University J K
PRC-8 3.95 22 Environmental
monitoring technologies
University K K
Company-based PRCs
PRC-9 6.52 23 Electric power
engineering
Multinational operation J K
PRC-10 7.97 28 Recording media
substrate
Multinational operation K
PRC-11 4.99 41 Mobile software
systems
Multinational operation K
PRC-12 4.50 3 Electrical engineering
test centre
Multinational operation J K
PRC-13 7.03 23 Controlled drug
delivery
Multinational operation J K
PRC-14 2.71 30 Automotive engineering Locally owned SME K
PRC-15 4.71 23 Food research and
development
Locally owned firm K
PRC-16 3.14 15 Scientific cameras Locally owned SME J K
PRC-17 4.15 20 Speciality
pharmaceuticals
Locally owned SME K
PRC-18 2.89 35 Proteomics Locally owned firm J K
B. Young et al. / Technovation 28 (2008) 473–484476
presentations made per employee for each PRC betweenFebruary 2004 and September 2006 (Table 2). A clusteranalysis of the university-based PRCs’ disseminationactivity together with the extent to which they focussedon basic R&D then generated three clusters consistent withthe open science, licensing and innovation model. Thisidentified four open science PRCs (PRC-1, PRC-2, PRC-3and PRC-4), which were involved in some basic R&D buthad fairly low levels of publications and presentations.Two PRCs were adopting a licensing model (PRC-5 andPRC-6), focusing on applied R&D and actively publishingand presenting their work, and two PRCs were adoptingthe innovation model (PRC-7 and PRC-8) focused ondevelopmental R&D with fairly low levels of publicationand presentation activity. It is important to note that ourclassification schema here is based solely on the types ofR&D being conducted in each PRC and its disseminationstrategy. Other classification schemas are of course possiblereflecting PRC’s sectoral focus, or use of IP protectionmechanisms.
4. Empirical results
4.1. IP strategy
The main influences on PRC’s IP management strategiesare summarised in Table 3. This highlights considerabledifferences in the IP strategy of company and university-based PRCs, but less clear differentiation within the groupof university-based PRCs. Within the group of company-based PRCs, however, the drivers of IP strategy did seemto reflect the characteristics of the host organisation withevident differences between PRCs based in locally ownedand multinationals.PRC-16 was relatively typical among PRCs based in
locally owned firms, in that their IP strategy was basedlargely on achieving speed to market (Table 3). Patentswere not seen as providing a huge commercial advantage,but were seen as a potential asset from an investor’s pointof view (Coriat and Orsi, 2002; Arai, 1999). The company’sIP strategy was described as:
ARTICLE IN PRESS
Table 2
Models of technology transfer in PRCs
PRC Basic R&D focus Publication activity Presentation activity Model
University-based PRCs
PRC-1 Major Low Low Open science
PRC-2 Minor Medium Medium Open science
PRC-3 Minor Low Low Open science
PRC-4 Minor Low Low Open science
PRC-5 None High High Licensing
PRC-6 None High Medium Licensing
PRC-7 None Medium Low Innovation
PRC-8 None Low Low Innovation
Company-based PRCs
PRC-9 None Low Low Multinational
PRC-10 None Low Low Multinational
PRC-11 None Low Low Multinational
PRC-12 None Low Low Multinational
PRC-13 None Low Low Multinational
PRC-14 None Low Low Local firm
PRC-15 None Low Low Local firm
PRC-16 None Low Low Local firm
PRC-17 None Low Low Local firm
Table 3
Profile of PRC’s IP strategies
Speed to market Commercial
advantage
Increased
investor
confidence
Codification Knowledge
creation and
dissemination
Technology
transfer
University-based PRCs
Open science model
PRC-1 | | |PRC-2 | | |PRC-3 |PRC-4 | | |
Licensing model
PRC-5 |PRC-6 | | |
Innovation model
PRC-7 |PRC-8 | | |
Company-based PRCs
Multinational
PRC-9 | |PRC-10 | |PRC-11 | |PRC-12 | |PRC-13 | |
Local firm
PRC-14 | |PRC-15 | |PRC-16 | | |PRC-17 |
Note: These responses reflect, mainly, the PRCs answers to a question: What are the main approaches to developing and commercialising the PRC’s
intellectual property? Other information also provided during the IP management interviews was also used to inform the classification, however.
B. Young et al. / Technovation 28 (2008) 473–484 477
partly being driven by our investors who would likemore of an IP portfolio y if we have something we useit as quickly as possible.
For the multinational-based PRCs, however, IP strategywas more strongly related to longer-term concerns, andIP codification and protection (Table 3). PRC-10, for
ARTICLE IN PRESSB. Young et al. / Technovation 28 (2008) 473–484478
example, was concerned with ensuring the company waswell placed to utilise future technologies (Roper et al.,2004), and claimed:
We would be more interested in what we call ourtechnology pipeline y If it does have patentability orsome form of IP that is a bonus.
Other multinational-based PRCs emphasised the impor-tance of IP protection, although this also reflected theindustry within which the PRCs were operating:
It’s very critical that everything we develop has IPprotection around it. That may be a new product,process, compound or just something new, but wealways try to get patent protection on this, especially inour industry.
As anticipated in P1a we therefore see a clear distinctionbetween the IP strategies of PRCs based in locally ownedand multinational companies, with the latter more likely toengage in formal IP protection (e.g. Blackburn, 2003).
For the university-based PRCs, IP strategies emphasisedknowledge creation and dissemination rather than achiev-ing competitive advantage, reflecting the public goodnature of much of their research (Table 3). As PRC-3 putit:
our main interest is being able to actually publish thework. If we can’t publish the work then really we getabsolutely no benefit from it.
Some university PRCs were clearly more engaged with acommercialisation agenda, as PRC-1 explains:
A key focus of the new vision within [the university] is agreater emphasis on knowledge exploitation, technologytransfer and commercialisation. We are at the forefrontof that.
However, in the majority of cases where PRCs wereengaging in IP exploitation, it was still seen as secondary towinning new research grants. According to PRC-2:
there would be a more determined effort to get researchcouncil type projects, but there is also a technologytransfer type role.
Other PRCs were seen as an intermediary step towardscommercial activities. PRC-6 explained:
The idea behind the Centre was not to do projects whichwould be immediately commercially viable, but to doprojects which, if they work, would give you the basis ofa project which would be commercially viable.
Moreover, industrial links formed by the university-based PRCs through licensing agreements or consultancywork are often viewed as a means of gaining access to acompany in order to pursue a particular research agenda.PRC-5 commented:
Our strategy is really to use that model and thequalifications that we have been building up throughthe Centres of Excellence programme in order to get afoot in the door with some local companies and thento start pursuing some research agendas with thosecompanies.
PRCs following the innovation model on the other handwere much more focused on the practical application oftheir research. As the original project proposal explains,the purpose of PRC-8 was to develop:
environmental tools capable of being used to solve awide range of environmental issues for industry.
However, in an interview it was pointed out that thePRC’s IP was not always commercialised, but often usedwithin ‘members companies’ who help fund the Centre’sresearch:
our member companies are entitled to royalty-freeaccess y if they are using the technology within theirown companies. If they want to use a technologycommercially then they have to negotiate a separatelicensing agreement with us.
As P1 suggests therefore we identify significant differ-ences between the IP strategies of the company anduniversity-based PRCs. For the company-based PRCscodified IP is a primary source of competitive advantage;whilst for the university-based PRCs commercialisationremains secondary to knowledge creation and dissemina-tion (Table 3). We also find the anticipated differences(P1a) between the IP strategies of PRCs based in locallyowned and multinationals. While there was some evidencethat university-based PRCs following the innovationmodel were more focused on the practical application oftheir research, we could identify no clear differentiation inIP strategies between the university PRCs, i.e. no clearsupport for P1b. This may reflect the limited extent towhich the university-based PRCs considered here haveadopted the licensing model.
4.2. IP incentives
These contrasts in IP strategy are reflected in thepractical steps taken by the PRCs to identify, developand protect their IP. Both university- and company-basedPRCs provided incentives to encourage staff to engage inIP identification and protection (Table 4). In all of theuniversity-based PRCs any revenue from IP (e.g. royaltiesfrom licensing agreements) was split between the univer-sity, the researcher and the researcher’s school or depart-ment. No such revenue sharing agreement was evident inthe company-based PRCs although some companies,notably the multinationals (i.e. PRC-10, PRC-11, PRC-12 and PRC-13), gave the inventor a bonus or patentaward for any invention which the company went on topatent. These awards ranged from a token gesture of $1 in
ARTICLE IN PRESS
Table 4
Profile of PRC incentives
Revenue
sharing
Patent bonus No incentive
scheme
University-based PRCs
Open science
PRC-1 |PRC-2 |PRC-3 |PRC-4 |
Licensing
PRC-5 |PRC-6 |PRC-7 |PRC-8 |
Company-based PRCs
Multinational
PRC-9 |PRC-10 |PRC-11 |PRC-12 |PRC-13 |
Local firm
PRC-14 |PRC-15 |PRC-16 |PRC-17 |
Note: These responses were based on the answers to a series of question in
the IP management interviews relating to incentives. The questions were:
(1) Who owns the intellectual property created in the PRC? (2) What
percentage of the royalties from licensing IP is normally awarded to the
researcher? Please specify whether this percentage is of gross or net
royalties. (3) What determines this percentage? (4) In the case of patents
does your policy include a clear mechanism for sharing revenues between
the organisation and the inventor? (If Yes, please give details). (5) What
determines this percentage?
Table 5
Formality of IP protection
Formal Informal
University-based PRCs
Open science
PRC-1 |PRC-2 |PRC-3 |PRC-4 |
Licensing
PRC-5 |PRC-6 |
Innovation
PRC-7 |PRC-8 |
Company-based PRCs
Multinational
PRC-9 |PRC-10 |PRC-11 |PRC-12 |PRC-13 |
Locally owned firms
PRC-14 |PRC-15 |PRC-16 |PRC-17 |
Note: This classification is based on PRCs responses to the following
question: What types of intellectual property protection has the PRC
employed?
B. Young et al. / Technovation 28 (2008) 473–484 479
PRC-13 to sizable sums of $1500 in PRC-11. PRC-10 alsohad a ‘Hall of Fame’ for employees with 10 patents whichincluded a $10,000 bonus.
As well as providing monetary incentives to encourageIP identification the PRCs were actively training staff on IPrelated issues. According to the company-based PRC-12,this meant that the IP management process had becomeingrained in company culture:
I suppose you would say that’s the culture within thecompany. In the engineering departments there wouldhave been training on the IP process. Therefore teammanagers would be aware of it and should be encoura-ging the staff and reminding them of the process. Thereis also a policy document which is available on theintranet.
Training on IP issues was not limited to the company-based PRCs, however, as PRC-1 explains:
[We] have seminars were people talk about IP andpatents and the patent process y The opportunity is
there, but if I am being honest they are not terribly wellattended y there might only be a dozen or so people.
In this sense, we therefore find some support for P2 withboth university- and company-based PRCs having im-plemented human resource practices which actively pro-mote the development and identification of IP. Approachesto incentivising staff clearly differ, however, between thecompany and university-based PRCs (Table 4).
4.3. IP protection
Another key element of IP strategy is whether PRCsused formal or legal means of IP protection or relied purelyon informal methods (Table 5). In general, the company-based PRCs commercialised their IP internally with thelevel of protection sought, and the formality of thatprotection, depending on organisational objectives. For themultinational-based PRCs, IP protection was seen as acompetitive strategy used to block imitation leading to theuse of more formal/legal methods of protection. PRC-13,for example, commented:
The IP really is to protect the product. Although it is anasset and it has commercial viability as a patent in itself.The reason we get it is to stop people coming in andcopying our idea. So the patenting is really as aprotective measure to ensure the idea cannot begenericised.
ARTICLE IN PRESSB. Young et al. / Technovation 28 (2008) 473–484480
In contrast, resource constraints seemed to be a factor indiscouraging locally owned firms from using IP protection.As PRC-16 explained:
You can spend an awful lot of time and waste a lot oftalented people’s time, chasing after something that isnot there in the end y You really have to havesomething pretty good and then you have to defend ity and usually that involves a lot of technical people.
In addition, formal IP protection was not alwaysappropriate for the type of technology being developed inthe PRCs. According to PRC-10:
The technologies that we develop from this site areimpossible to reverse engineer from the finished product.Hence they wouldn’t be patented. They [patents]actually put that know-how into the field and once it’sout there it’s at risk from either being reverse engineeredor misused.
Other organisational mechanisms were used by thecompany-based PRCs to protect their IP (Table 5). Fewstaff in the company-based PRCs, for example, gave papersat workshops or conferences. PRC-15 commented:
We don’t actively go out to give papers these days. Wewould have given papers and we would have writtenpapers in the journals of y technology in the past, butwe don’t do that anymore. We are too close to themarket in these things. The whole industry has becomemore commercial and secretive.
More specifically among the company-based PRCs, onlyPRC-16 published any working papers, while all of theuniversity-based PRCs submitted papers for publication.PRC-16 outlined the motivation for this as follows:
Our publishing is mainly driven by being seen to beactive. Remember our customers are researchers. That iswhere our income comes from. Being associated withthat community and seen as part of that community isimportant. As far as possible we don’t publish papers onthings that would be useful to our competitors. Wecome at it from a slightly different angle becauseresearchers are our customers.
The majority of university-based PRCs sought to patenttheir IP where possible and then either license out that IPto a third party or create a spin-out company. The choiceof exploitation route was dependent on the balancebetween IP protection costs and potential revenue streamsbut did not appear to be influenced by the model adoptedby the PRC. PRC-4 and PRC-6 engaged in both licensingand spin-out activity. PRC-6 explained the choice ofexploitation route depends on the project:
There are six major projects running in the Centre: oneof them has got sufficiently far enough for us to say thatthis is definitely going to be a spin-out company;another one of them is in negotiations with relevant
food companies, that one would probably go by way ofeither us providing a service for them or us just sellingthem the total rights. The other four: one of them seemsto be working and will probably go through a patentand then try licensing the patent y One of them is justtoo early to say and the other two: one of them is almostcertainly going to go down the patent route y and theother has taken up a lot of time and hasn’t producedanything that we can definitely patent yet.
However, some university-based PRCs voiced concernsabout the cost of patenting, identifying this as a barrier tothe adoption of formal IP protection strategies. One PRCclaimed:
It’s such an expensive thing to do y You have to berestrictive and try to cherry pick which things to patenty For example, we may not be able to afford to takeout a worldwide patent which leaves our IP vulnerableto being exploited.
PRC-3 and PRC-5, however, did not commerciallyexploit their IP. In these PRCs the main output, in termsof IP, was the publication of papers. Both PRCs alsoundertook commercial consultancy with the primarypurpose of engaging companies in research activity whichcould lead to academic papers.We therefore find considerable support for P3, with the
majority of PRCs engaged to a greater or lesser extent withIP protection. Clear differences exist between the use offormal IP protection by PRCs in multinational and locallyowned firms (Table 5). This provides support for P3a. Thedistinction between the university-based PRCs was lessclear. Therefore, we find no support for P3b.
4.4. Specialist services
The literature indicates that PRCs in different organisa-tional settings are likely to devote different levels ofresources to the development and protection of IP. Weasked the PRCs whether IP management was conductedwithin the PRC, by a specialist team within theirsponsoring organisation, or by an external organisation(Table 6).IP protection in the university-based PRCs was carried
out in conjunction with the university technology transferoffice (TTO) which played a largely reactive role-respond-ing when notified of discoveries with a potential commer-cial application. The extent to which the university-basedPRCs involved the university’s TTO in IP management,however, depended on the prior experience of the academicstaff involved. Where academic staff were familiar with thepatent process the TTO was simply used to fulfil legal andadministrative obligations. Less experienced academic stafftended to contact the TTO at a much earlier stage to seekadvice regarding patentability and support throughout thepatent process. Similarly, if the academic involved hadstrong links to industry, or if there was an existing
ARTICLE IN PRESS
Table 6
Use of specialist services for IP management
PRC only—
no external
specialist
services
Sponsoring
organisation
External
support
University-based PRCs
Open science
PRC-1 |PRC-2 |PRC-3 |PRC-4 |
Licensing
PRC-5 |PRC-6 |
Innovation
PRC-7 |PRC-8 |
Company-based PRCs
Multinational
PRC-9 |PRC-10 |PRC-11 |PRC-12 |PRC-13 | |
Locally owned firm
PRC-14 |PRC-15 |PRC-16 |PRC-17 | |
Note: In the IP management interviews the PRCs were asked the following
questions: In your organisation is intellectual property management
(including identification, promotion and commercialisation) conducted
by: the PRC; a technology transfer office; an external organisation. How
does this work in practice?
B. Young et al. / Technovation 28 (2008) 473–484 481
relationship with a particular company, then the TTO wasonly involved at a basic level, i.e. in the signing of contractsor non-disclosure agreements. If, on the other hand, theacademic was not well connected they also used the TTO toidentify potential licensing partners.
This difference in experience levels was reflected in theuse of the TTO by the different types of university-basedPRC. Staff working in open science PRCs tended to be lessexperienced in the patenting process and therefore tendedto rely more heavily on the TTO from the initialidentification of patentable IP right through to exploita-tion. PRC-2 detailed their involvement with the universityTTOs:
We identified that we had IP that was patentable andthrough the university we are getting that patent. Thatwas actually done through [the TTO]. Then the ongoingexploitation of that IP is being done in consultation with[the TTO].
Where academics have technology transfer experience,they tended to be more involved in the transfer process,using the university TTO to a more limited extent, i.e. tofulfil administrative and legal requirements.
Use of specialist IP services was not observed in thosePRCs based in locally owned firms (Table 6). PRCs basedin multinationals, however, involved a wider group of staffeither internal to the firm (PRC-9, PRC-10, PRC-11 andPRC-12) or involving external patent lawyers (PRC-13). InPRC-12, for example:
[the Project Engineer for Design and Patents] wouldknow all of the inventors y [and] would know if theyhave any new ideas. Then we have invention disclosureforms, which they would briefly fill in. It is just a roughdescription. We would time and date stamp that to giveus proof of the creation date. We would get in touchwith the company’s patent lawyers at that stage y
There would be some forum were those ideas arediscussed and categorised y The way it works meansthat there is a central or focal point. The engineers knowwhere to go if they have any intellectual propertyquestions or technology questions. It is structured.
We therefore find considerable support for P4 with allPRCs having access to specialist support services (Table 6).The use of these services did appear to depend on the IPmodel adopted in the university-based PRCs and theorganisational context of the company-based PRCs.
5. Conclusion
Our data, drawn from a set of 18 UK R&D centresfunded through a single government programme, suggestsome contrasts in IP strategy and management betweenuniversity-based and company-based R&D centres despitetheir common funding source. We also observe differenceswithin each group depending on the nature of the firm inwhich each R&D centre is located and—to a lesser extent—the IP model adopted in university-based R&D centres.In terms of IP strategy, we find continuing differences
between the company and university-based PRCs. For thecompany-based PRCs codified IP is a primary source ofcompetitive advantage, which despite their public funding,restricts external dissemination and knowledge transfer.For the university-based PRCs in our sample on the otherhand, IP commercialisation remains secondary to knowl-edge creation and dissemination, with little clear differencein strategy between centres adopting apparently differentIP models. A range of possibilities are evident here. Itcould simply be that we have allocated PRCs wronglybetween the open science, licensing and open innovationmodels evening out any differences in IP strategy whichmight be evident with a different allocation. Alternatively,and perhaps more consistent with the apparent uniformityof IP strategy between the university-based PRCs, is thatthey have developed no comprehensive IP strategyindependent of the norm within the university or simplythat they have no clear IP strategy. Whatever the case, it isclear that for the university-based PRCs the public goodaspect of their activities remains predominant, epitomisedby extensive dissemination activities. Therefore, we found
ARTICLE IN PRESSB. Young et al. / Technovation 28 (2008) 473–484482
little evidence of the increasingly secretive culture whichMowery et al. (2004) identified in the US universities.
Within the group of company-based PRCs organisa-tional characteristics, such as size and ownership, didappear to influence their IP strategy. The IP strategy ofPRCs based in multinationals was based on longer-termconcerns of IP codification and protection, whereas PRCsbased in locally owned firms were more focused onachieving speed to market. Within the university-basedPRCs we found some centres that were clearly moreengaged in a commercialisation agenda. For instance,PRCs following the innovation model were much morefocused on the practical application of their research,however, even these PRCs considered IP exploitation assecondary to knowledge creation. Moreover, industriallinks formed through commercialisation activity were oftenviewed as a means of gaining access to a company in orderto pursue a particular research agenda.
Given the increasing importance of IPR (Hanel, 2006;Coriat and Orsi, 2002; Arai, 1999; Allen, 2003) it wasencouraging to find that all PRCs had clear and welldefined IP ownership policies, thus protecting the organi-sations’ investment in R&D and avoiding unnecessary legaldisputes. In addition, many centres, including all of thosebased in universities, actively encouraged the creation andprotection of IP by providing financial incentives and stafftraining on IP issues. Approaches to incentivising staffclearly differ, however, between company and university-based PRCs.
The level and formality of IP protection sought bycompany-based PRCs depended on organisational objec-tives, available resources and the type of technology beingdeveloped, with centres based in multinational’s morelikely to engage in formal IP protection than those insmaller locally owned firms. The majority of university-based PRCs sought to patent their IP where possible andthen either license out that IP to a third party or create aspin-out company. There was, however, clear evidence thatthe cost of obtaining and defending patents was prohibitivefor some locally owned and university-based PRCs. In eachcase, these difficulties are likely to have a negative effect onthe longer-term regional benefits of any public investmentin R&D either by encouraging secrecy on the part of thecompany-based PRCs or by creating unprotected intellec-tual assets in the university-based PRCs.
Every PRC had access to expert advice on IP manage-ment, either from within their sponsoring organisation orthrough external patent lawyers. The way in which thecompany-based PRCs used these support services de-pended on organisational characteristics such as size andownership, while for the university-based PRCs priorexperience was the determining factor. This means notonly are the PRCs seeking to create advantage byprotecting their IP from misuse by other organisations,but they are also actively trying to exploit it for their ownfinancial gain. This should have a positive influence on theinnovative capacity of the PRCs and therefore on their
ability to generate positive regional spillovers (Graversenet al., 2005; Link and Siegel, 2005).
6. Implications
The previous sections have suggested the impact whichorganisational context has on the IP management practicesadopted by PRCs. This section focuses on the differentialpatterns of knowledge spillovers likely to arise from thisvariation and the implications for policy-makers.Our study shows that knowledge creation and dissemi-
nation remain central to the IP strategies of university-based PRCs. This clearly creates the potential for pureknowledge spillovers, although the potential for rent-basedspillovers is less obvious. The IP strategies of the company-based PRCs, on the other hand, were based on creatingcompetitive advantage. This restricts external dissemina-tion and therefore any positive ‘pure knowledge’ external-ities arising from knowledge transfer (e.g. Beugelsdijck andCornet, 2001). Of course, IP gains to the firms involved inthe programme may still generate private benefits to theorganisation and rent-based spillovers as the firm hostingthe PRC interacts with its customers and suppliers. Thiscontrast suggests the alternative patterns of regionalspillovers which might stem from public funding ofuniversity- and company-based PRCs, i.e. predominantlyrent-based spillovers from company-based centres, andpredominantly pure knowledge spillovers from university-based centres.However, we also found differences in the IP strategies
of locally owned and multinational firms. The multi-nationals employed much more aggressive IP strategies andwere more likely to seek formal IP protection thereforereducing the need for secrecy. This creates a greaterpotential for pure knowledge spillovers relative to thosefrom locally owned firms. However, due to the interna-tional nature of multinationals, these pure knowledgespillovers will not be geographically restricted and mayoccur anywhere in the world. Similarly, any rent-basedspillovers arising from research carried out in multi-nationals may not be limited to the area surrounding thePRC (Reddy, 1997). The degree to which a region willbenefit from such rent-based spillovers will thereforedepend on the absorptive capacity of local firms and extentto which the multinational is embedded in the local supplychain (Hewitt-Dundas et al., 2005). Essentially similararguments can be made regarding pure knowledge spil-lovers from university-based PRCs. In the PRCs studieddissemination activity was taking place at an internationallevel and therefore knowledge transfer activity was notrestricted to the host region. Again, the extent to which theregion will benefit from these spillovers depends on therelevance of the R&D to local industry and the absorptivecapacity of local firms.So, organisational context affects IP strategy and
management, which will, in turn, influence the type ofspillovers arising from PRCs. Therefore, when designing
ARTICLE IN PRESSB. Young et al. / Technovation 28 (2008) 473–484 483
future initiatives, policy-makers should consider theregional context in order to invest in PRCs which aremost likely to generate the desired profile of spilloverbenefits. For example, a peripheral region with weak localsupply chain linkages may benefit most from university-based PRCs, which are more likely to create pure knowl-edge spillovers. On the other hand, a core region withstrong local supply chain linkages may benefit most fromPRCs based in locally owned firms which may be morestrongly embedded in local industry and should thereforegenerate the most substantial rent-based spillovers. Effi-cient IP management within the PRCs is therefore anecessary—for generating useful spillovers from publiclyfunded research.
Acknowledgements
We are grateful to Invest Northern Ireland for fundingthe research on which this paper is based. We are gratefultoo for the time and kindness of staff in the researchcentres during the period of this study. Valuable commentson earlier drafts were received from participants in theTechnology Transfer Society Annual Conference, PalmSprings, California, October 2007; the Irish Academy ofManagement 10th Annual Conference, Belfast, September2007; and, the 2nd EPIP Conference, Lund, Sweden,September 2007. Interpretations and mistakes in the paperare those of the authors alone.
References
Allen, K.R., 2003. Bringing New Technology to Market. Prentice-Hall,
New Jersey.
Arai, H., 1999. Intellectual Property policies for the twenty-first century:
the Japanese experience in wealth creation. Policy Advisory Commis-
sion of the World Intellectual Property Organization.
Beugelsdijck, S., Cornet, M., 2001. How far do they reach? The
localisation of industrial and academic spillovers in the Netherlands.
Centre Discussion Paper, No. 47.
Bigliardi, B., Dormio, A.I., Nosella, A., Petroni, G., 2006. Assessing
science parks’ performances: directions from selected Italian case
studies. Technovation 26, 489–505.
Blackburn, R.A., 2003. Intellectual Property and Innovation Management
in Small Firms. Routledge, London and New York.
Bozeman, B., 2000. Technology transfer and public policy: a review of
research and theory. Research Policy 29, 627–655 Elsevier, Amster-
dam.
Chen, J., Zhu, Z., Xie, H.Y., 2004. Measuring intellectual capital: a new
model and empirical study. Journal of Intellectual Capital 5 (1),
195–212 Emerald Group Publishing Limited.
Chesbrough, H., 2003. Open Innovation. Harvard Business School Press,
Harvard.
Cooke, P., Leydesdorff, L., 2006. Regional development in the knowledge-
based economy: the construction of advantages. Journal of Technol-
ogy Transfer 31 (1), 5–15.
Coriat, B., Orsi, F., 2002. Establishing a new intellectual property rights
regime in the United States. Origins, content and problems. Research
Policy 31, 1491–1507 Elsevier, Amsterdam.
Debackere, K., Veugelers, R., 2005. The role of academic technology
transfer organizations in improving industry–science links. Research
Policy 34 (3), 321–342 Elsevier, Amsterdam.
Department of Enterprise, Trade and Investment, 2003. Northern Ireland
Research and Development Statistics 2002. National Statistics
Publication, Northern Ireland Statistics & Research Agency, 28
November, pp. 1–30.
Dietz, J.S., Bozeman, B., 2005. Academic careers, patents, and productiv-
ity: industry experience as scientific and technical human capital.
Research Policy 34 (3), 349–367 Elsevier, Amsterdam.
European Union, 2004. Management of Intellectual Property in publicly
funded research organisations: towards European guidelines. Eur-
opean Commission, Expert Group, European Commission, Luxem-
bourg.
Feller, I., 2004. S&T-based development and the University. Economic
Development Quarterly 18 (2), 138–150 Sage.
Fernandez, E., Junquera, B., Vazquez, C., 1996. Government support for
R&D: the Spanish case. Technovation 16, 59–66 Elsevier, Amsterdam.
Gloet, M., Terziovski, M., 2004. Exploring the relationship between
knowledge management practices and innovation performance.
Journal of Manufacturing Technology Management 15 (5), 402–409
Emerald Group Publishing Limited.
Graversen, E.K., Schmidt, E.K., Langberg, K., 2005. Dynamic research
environments: a development model. The International Journal of
Human Resource Management 16 (8), 1498–1511 London.
Guellec, D., Van Pottelsberghe De La Potterie, B., 2004. From R&D to
productivity growth: do the institutional settings and the source of
funds of R&D matter? Oxford Bulletin of Economics and Statistics 66
(3), 353–378.
Hanel, P., 2006. Intellectual Property Rights business management
practices: a survey of the literature. Technovation 26 (8), 895–931
Elsevier, Amsterdam.
Hewitt-Dundas, H., Andreosso-O’Callaghan, B., Crone, M., Roper, S.,
2005. Knowledge transfers from multi-national plants in Ireland—a
cross-border comparison of supply chain linkages. European Urban
and Regional Studies 12 (1), 23–43.
Iansiti, M., Levien, R., 2004. The Keystone Advantage. Harvard Business
Press, Harvard.
Invest Northern Ireland, 2003. RTD Centres of Excellence. /http://www.
